WASHINGTON — Denouncing a “squandering of the people’s money,” lawmakers voted decisively Thursday to impose a 90 percent tax on millions of dollars in employee bonuses paid by troubled insurance giant AIG and other bailed-out companies.

The House vote was 328-93. Similar legislation has been introduced in the Senate and President Barack Obama quickly signaled general support for the concept.

“I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated,” the president said in a statement.

House Speaker Nancy Pelosi, D-San Francisco, told colleagues, “We want our money back now for the taxpayers. It isn’t that complicated.”

The outcome may not have been complicated. But the lopsided vote failed to reflect the contentious political battle that preceded it.

Republicans took Democrats to task for rushing to tax AIG bonuses worth an estimated $165million after the majority party stripped from last month’s economic stimulus bill a provision that could have banned such payouts.

“This political circus that’s going on here today with this bill is not getting to the bottom of the questions of who knew what and when did they know it,” said House Republican Leader John Boehner of Ohio.

He voted “no,” but 85 fellow Republicans joined 243 Democrats in voting “yes.” It was opposed by six Democrats and 87 Republicans.

The bill would impose a 90percent tax on bonuses given to employees with family incomes above $250,000 at American International Group and other companies that have received at least $5billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.

Quick action

The House vote, after just 40 minutes of debate, showed how quickly Congress can act when the political will is there.

It was only this past weekend that the bailed-out insurance giant paid bonuses totaling $165million to employees, including traders in the Financial Products unit that nearly brought about AIG’s collapse.

AIG has received $182.5billion in federal bailout money and is now 80percent government-owned. Disclosure of the bonuses touched off a national firestorm that both the Obama administration and Congress have scurried to contain.

In a statement issued by the White House late Thursday, Obama said the House vote “rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat.”

“In the end, this is a symptom of a larger problem – a bubble-and-bust economy that valued reckless speculation over responsibility and hard work,” he said. “That is what we must ultimately repair to build a lasting and widespread prosperity.”

In his statement, Obama did not explicitly endorse the House bill. Instead, he was careful to take a wait-and-see attitude on final legislation while making clear that he supports getting the bonus money back.

Topic No. 1 raised by Republicans during the House debate was the last-minute altering of a provision in Obama’s $787billion stimulus law to cap executive compensation for firms receiving government bailouts.

Proposal revision

The measure might have forestalled payment of the AIG bonuses. But Senate Banking Committee Chairman Chris Dodd, a Connecticut Democrat and the author of the provision, says the administration insisted that he modify his proposal so that it would only apply to payments agreed to in the future.

That, critics claim, cleared the way for the AIG payouts.

“The idea came from the administration,” Dodd said.

A similar, but not as punitive, bill to recoup bonus payments with taxes was gaining support in the Senate.

It would impose a 35percent excise tax on the companies paying the bonuses and a 35percent tax on the employees receiving them. The taxes would apply to all companies receiving government bailout money, but they are clearly geared toward AIG.

“This is not just another case of runaway corporate greed and arrogance, ripping off shareholders by excesses lavished around the executive suite,” said Rep. Earl Pomeroy, D-N.D. “These bonuses represent a squandering of the people’s money….Starting right here, right now, we are saying no more.”

Join the Conversation

We invite you to use our commenting platform to engage in insightful conversations about issues in our community. Although we do not pre-screen comments, we reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable to us, and to disclose any information necessary to satisfy the law, regulation, or government request. We might permanently block any user who abuses these conditions.

If you see comments that you find offensive, please use the “Flag as Inappropriate” feature by hovering over the right side of the post, and pulling down on the arrow that appears. Or, contact our editors by emailing moderator@scng.com.